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This webinar qualifies for 1 CE under the guidelines of the CFA Institute Continuing Education Program. We encourage CFA Institute members tologinto the CE tracking tool to self-document these credits.

The webinar will address the following learning outcomes. Understanding:

Results of a global survey conducted by ACCA and CA NZ in 2018 provide insights from leading organisations around the world on the adoption of robotics in finance. KPMG shares their clients' experience in the implementation robotic process automation.

Artificial intelligence has the potential to impact the ethical foundations of the investment profession. CFA Institute is seeking input on how its Code of Ethics and Standards might reflect the increased use of the technology.

Equity crowdfunding is a relatively new development, involving the sale of shares without mandatory corporate disclosure or audited accounts. Informal disclosure norms have, nevertheless, developed, and are clearly grouped by the host platform.

The paper has been accepted for presentation at 23rd Annual (2019) New Zealand Finance Colloquium

This webinar qualifies for 1 CE under the guidelines of the CFA Institute Continuing Education Program. We encourage CFA Institute members tologinto the CE tracking tool to self-document these credits.

Larry Cao, Director of Industry Research at CFA Institute, talks about the promises and challenges of deep learning, and how artificial intelligence finds application in the investment industry, in an interview for MioTech.

Centralized exchanges constitute a weak point in the cryptoassets ecosystem, as the are vulnerable to hacking and theft. Although more secure, decentralized exchanges have been created, they languish in obscurity. Are they a solution that can bring better security and price stability?

In its Banking Quarterly Report for Q2 2018, Frontier Insights focuses on mobile money in Sri Lanka. The report analyses how mobile money will impact the financial industry. Is it a threat to brick-and-mortar banks or will it have a positive effect?

While a run-up in value of crypto-assets before the end of the year is unlikely, we present a brief analysis of short- and long-term market opportunities in crypto on which digital asset management protocols should be focusing.

This report qualifies for 2.5 CE under the guidelines of the CFA Institute Continuing Education Program. We encourage CFA Institute members tologinto the CE tracking tool to self-document these credits

How will FinTech affect the future of financial institutions, careers of financial professionals and other stakeholders? CFA Institute's report covers the business and technology aspects of FinTech in Asia Pacific.

Given the recent rise of interest in Blockchain technology and cryptocurrencies, it‘s quite clear that there is a growing unspoken need for professional portfolio management services and well-established investment techniques.

The proliferation of investment opportunities and the increase in the sheer size of each investment in the cryptographic asset space requires the incorporation of concepts such as diversification, asset allocation and other basic and well-tested investment techniques. As the market grows, it’s obvious that there is a compelling need for both: professional portfolio management skills as well as a good understanding of the underlying information technology.

Customer identification and due diligence are essential tools in maintaining confidence and trust in the financial system. The regulatory requirements that govern them must be balanced against objectives of financial inclusion, overall customer experience, financial competitiveness and economic growth.

The FSDC outlines a strategy for technological and regulatory infrastructure of digital identification and eKYC that will support Hong Kong’s role as a leading 21st century international financial centre.

Excerpts from a book about the merger of finance and technology (fintech), and how they impact each discipline within the financial services industry. An introduction to understanding the various areas of fintech and terminology such as A.I., big data, robo-advisory, blockchain, cryptocurrency, insuretech, cloud computing, crowdfunding and many more.

Disruptive innovation refers to innovation that creates new markets and value networks that displace competitors and existing players. Given the disruptive innovation happening globally across markets, the financial sector is not spared. What does the future hold?
A presentation by Maria Wilton, CFA, at the Philippines Investment Conference 2018. (52 min.)

This article qualifies for 0.75 CE under the guidelines of the CFA Institute Continuing Education Program. We encourage CFA Institute members tologinto the CE tracking tool to self-document these credits.

As initial coin offerings (ICOs) explode in popularity in the startup world, they are surrounded by controversy. The response of market practitioners and regulators has varied, from enthusiasm to outright bans. Li and Mann offer an economic analysis of the role of ICOs in development of platforms. They analyze economic efficiency to pinpoint when token sales create value. Their findings have implications for regulators and practitioners in the booming ICO market.

Bitcoin mining has developed into an industry in its own right. But specialized equipment manufacturers (ASICs) now control the market, deriving most of the profits from it. Parham and Kjenstad analyse the economics of the Bitcoin mining market, showing that their model is able to predict energy consumption by miners and R&D expenditure by manufacturers. They then use the economics of this market to test whether more competitive industries invest more in R&D.

Venture capital (VC) helps startups succeed, not only by providing financing, but also by "certifying" their value to entrepreneurs and public investors. VC also helps firms in other ways, for example by helping them access new potential customers. Does this effect extend to the startup's products and potential customers? This paper analyses 154 startup companies in the peer-to-peer lending space in China, to measure how significant the effect of VC investment is on the companies' trading volume and number of lenders.

How does expanding access to credit affect individual consumption? Authors use data from China's e-commerce platforms Taobao and Tmall to track the effect of increased credit limits on the borrowers' level of consumption. They find that expanding credit access increases the borrowers' propensity to spend, in particular on gaming-related products.

This article qualifies for 0.75 CE under the guidelines of the CFA Institute Continuing Education Program. We encourage CFA Institute members tologinto the CE tracking tool to self-document these credits.

The financial system is morphing as smart entrepreneurs find a back door into financial services and offer services that are easier, better, cheaper, faster and more efficient. Data analytics allows ride share companies to become banks. Retail is becoming a bank. Payments companies are becoming banks. And now Amazon has entered banking. The Amazon moment for banks has arrived and the banks are only engaging in minor changes at the edges. A great disruption is ahead.
Dr. Paul Schulte speaks at the Philippine Investment Conference 2018.

Introduction
Over the past nine years of low-interest rates and slow economic growth, retail investors have become increasingly sensitive to traditional wealth managers, who charge high fees for their financial advice. They are now turning to a new breed of advisors – robo-advisor: automated portfolio construction software that is fully distributed online. Robo-advisors usually rely on exchange-traded funds (ETFs) to construct clients’ portfolios but can sometimes incorporate more sophisticated asset classes such as smart beta funds, long equity funds, bond funds, long/short hedge funds, mutual funds, and leveraged funds. Since the first robo-advisors were introduced to retail investors, these automated solutions’ assets under management (AUM) have been steadily growing year-on-year. There are now more than 200 of them worldwide (Investopedia, 2018).

With the advent of simplified coding, math, algorithms processing, and cloud computing, this number is now growing every day, showcasing retail investors’ unabated demand for the value for money robo solutions deliver and robos’ digital service convenience, compared to traditional wealth managers. However, AUM managed by robo-advisors around the world and in Asia has not taken off as much as expected. Both Hong Kong and Singapore robo-advisors have, so far, failed to reach the staggering growth rates projected at the start of 2015 (Collins, 2016) by digital wealth space observers. This is despite governments of both cities recognizing the trend and actively supporting fintech start-ups.

Need for further research
Few possible explanations according to Okhonko E., 2017 can be the areas of clients’ concerns that robo-advisors must still address: lack of trust and understanding of algorithms, preference for human touch and somebody to call, and uncertainty and lack of transparency of robo investment. The need for further research and information transparency in two related aspects of robo-advisory offering, investment models’ algorithms and investment performance results generated by them, was explicitly highlighted.
The main issue in addressing this need lies in the fact that most robo-advisory solutions use an extremely scattered variety of investment algorithms and methodologies to construct clients’ portfolios. Nonetheless, few authors attempted to address this need by directly investing with several robo-advisors and then, reporting their cumulative performance. Some of the articles and reports along with their results can be found in the Internet (Lou, 2018), (Value Penguin Inc., 2018), (Scholz, 2017). These “studies” are limited to the available historical performance data, which, for the newly launched robos, have not crossed the financial industry standard of a 5-year horizon, which is required to calculate meaningful Sharpe and Sortino ratios. Besides, the majority of the “studies” only disclose returns data, leaving the readers guessing about the risk that was taken to produce it (YEO, 2017). Additionally, performance track record cannot be used as a criterion to evaluate B2B robo-advisory players, as they do not serve end clients directly.

New methodology and paper scope
This summary article aims to highlight all the key aspects of the white paper “Portfolio allocation models’ questionnaire: inferring the quality of potential investment performance through models’ inputs assessment”, which was written in order to present a new method that looks at robos’ investment performance without the need to invest in them directly. This method also provides a workaround that allows not to rely on historical returns and risks data, but at the same time, gives rich insights into the potential investment performance. Through analysing and evaluating the different types of portfolio asset allocation models, this paper presents the Portfolio Allocation Models’ Questionnaire that has been designed to distinguish major robo-advisory portfolio construction models and segment them according to the level of complexity and sophistication.

Digitalization of government transactions is present phenomenon. Every citizen holds dozens of cards for cordless governance, cashless transactions and financial transparency. But we found that issues like hackers, fraudulent online transactions, insufficiency of technological up gradation hampers the fundamental objective of cordless transactions. Judiciary is also questioning the validity for “Aadhar” linking with all the transactions involved in welfare of people. In this context, this paper aimed to examine the status and challenges in achieving financial transparency through digital India.
Digitalization of government transactions is present phenomenon. Every citizen holds dozens of cards for cordless governance, cashless transactions and financial transparency. But we found that issues like hackers, fraudulent online transactions, insufficiency of technological up gradation hampers the fundamental objective of cordless transactions. Judiciary is also questioning the validity for “Aadhar” linking with all the transactions involved in welfare of people. In this context, this paper aimed to examine the status and challenges in achieving financial transparency through digital India.

Research in cryptofinance has continued to consider whether Bitcoin possesses a safe haven property as traditionally defined by its correlation with other assets during times of market stress. However, this neglects other attributes of assets that are important to investors during periods of crisis. Bitcoin is more volatile, less liquid, and costlier to transact (in terms of time and fees) than other assets (including the traditional safe haven of gold) even in normal market conditions. Until the market matures, it is therefore unlikely to be worth considering Bitcoin as a safe haven.

Using career of Joanna Hill, Chief Advisor for Research and Strategy at CBOE Vest Financial, as an example, this talk will discuss how changes in investment management and financial markets over the last several decades have impacted careers in these industries. The talk will highlight some of the skills and career management techniques that have proven useful in developing a successful career path despite the rate of change from technology applied to investing and markets and from financial market volatility. Examples of from quantitative finance and risk management will be used as illustrations. The evolution of ETFs will be another example discussed with respect to how this new investment management and trading product has created career opportunities in several different functional areas that did not exist a decade ago. The role of networking and her experience founding the Women in ETFs organization which now has over a dozen global chapters and almost 4,000 members will be discussed. She looks forward to questions from the audience.

Exchange-traded funds or ETFs have thrived in the U.S with an asset growth rate of 15% in the last decade and now regularly represent 25% or more of the dollar amount of U.S. exchange trading activity. At the end of February 2018, assets in exchange traded products (ETPs), consisting of ETFs and exchange- traded notes (ETNs), reached $5 trillion globally according to ETFGI, of which U.S. ETF assets represent about 70% of the total. This vehicle for packaging investment strategies is unique in that it is utilized by all categories of investors from large pension funds to hedge funds and individual investors.
To some investors ETFs are trading tools while to others they are long-term core investment holdings. It is hard to think of any other financial product that has such a variety of uses and types of clients. Because ETFs are accessed through exchanges and rely on low fees and transparent strategies, the success of ETFs as both investment and trading vehicles has been disruptive to both the fund management and trading businesses.
This talk will look at the history of index and quantitative strategies that apply technology and analytical rules to portfolio construction. Today, these are primarily being applied through ETFs. Technology and broad access to investment information and analytics has helped the broader group of investors access strategies that were historically used only by the largest institutional investors. Technology has also facilitated the arbitrage that makes ETF market-making efficient and helps it serve a strong support for asset growth. However, exchanges have infrastructure and regulatory policy that is more suited to stock than ETF trading.
Asset managers, are in the early stages of applying analytics to customize portfolio construction (robo-advisors). Multi-asset investment strategies and other innovations are being adapted to the availability of a broad set of investment options made available through ETFs. Also, smart beta strategies and factor investing are the latest iteration of quantitative investment strategies. Risk management and option-based strategies are still in very early stages but are also being made available through ETF packaging.

We study whether and to what extent peer-to-peer (P2P) credit helps circumvent loan-to-value (LTV) caps, a key macroprudential tool to contain household leverage. We exploit the tightening of mortgage LTV caps in a number of cities in China in 2013 as our testing ground, in a difference-in-differences setting, and we base our tests on a novel, hand-collected database covering all lending transactions at RenrenDai, a leading Chinese P2P credit platform. P2P loans increase at the cities affected by the LTV cap tightening relative to the control cities, consistent with borrowers tapping P2P credit to circumvent the regulation. The granularity of our data allows us to separate credit demand from credit supply effects, with a fixed effects strategy. Our results also indicate that P2P lenders do not adjust their pricing and screening to the influx of new borrowers after 2013, despite the fact that their loans ex post have higher delinquency and default rates. Symmetric effects are associated with a loosening of mortgage LTV caps in 2015. Our test provides empirical evidence on the capacity of P2P credit to undermine LTV caps. More broadly, our analysis informs the debate on the challenges posed by the interaction between FinTech and credit regulation.

This is discussion for role and future of DATA from financial statement.
You may imagine that analysts read financial statements prepared by company, evaluate company’s value and compare with peer companies….BUT, in reality, financial statements are used in various ways. There are many quant analysts and passive investors using information as “data”, which is standardized in a database (DB), and they have become the majority of market participants globally. In such case, real time data distribution has important role on the impact on the stock price. Also, use of Artificial Intelligence (AI) in analysis and investment has become more common today.
First, financial statements have to be converted into “Data” and then the data can travel through the market.
We discussed how financial data are used, but from a different angle, and consider the role of future financial statements and accounting standards.

Cryptocurrencies have grown rapidly in price, popularity, and mainstream adoption. The total market capitalization of bitcoin alone exceeds $250 billion as at January 2018, with a further $400 billion in over 1,000 other cryptocurrencies. Over 170 “cryptofunds” have emerged, attracting around $2.3 billion in assets under management. What was once a fringe asset is quickly maturing.

The rapid growth in cryptocurrencies and the anonymity that they provide users has created considerable regulatory challenges, including the use of cryptocurrencies in illegal trade (drugs, hacks and thefts, illegal pornography, even murder-for-hire), potential to fund terrorism, launder money, and avoid capital controls. There is little doubt that by providing a digital and anonymous payment mechanism, cryptocurrencies have facilitated the growth of “darknet” marketplaces that trade illegal goods and services.

In a recent research paper, we quantify the amount of illegal activity that involves the largest cryptocurrency, bitcoin. As a starting point, we exploit several recent seizures of bitcoin by law enforcement agencies to construct a sample of known illegal activity. We also identify the bitcoin addresses of major illegal darknet marketplaces. The public nature of the blockchain allows us to work backwards from the law enforcement agency bitcoin seizures and the darknet marketplaces through the network of transactions to identify those bitcoin users that were involved in buying and selling illegal goods and services online. We then apply two econometric methods to the sample of known illegal activity to estimate the full scale of illegal activity.

We find that illegal activity accounts for a substantial proportion of the users and trading activity in bitcoin. For example, approximately one-quarter of all users (25%) and close to one-half of bitcoin transactions (44%) are associated with illegal activity. The estimated 24 million bitcoin market participants that use bitcoin primarily for illegal purposes (as at April 2017) annually conduct around 36 million transactions, with a value of around $72 billion, and collectively hold around $8 billion worth of bitcoin.

To give these numbers some context, the total market for illegal drugs in the US and Europe is estimated to be around $100 billion and €24 billion annually. Such comparisons provide a sense that the scale of the illegal activity involving bitcoin is not only meaningful as a proportion of bitcoin activity, but also in absolute dollar terms. The scale of illegal activity suggests that cryptocurrencies are transforming the way black markets operate by enabling “black market e-commerce”. In effect, cryptocurrencies are transforming the black market much like PayPal and other online payment mechanisms revolutionized the retail industry through online shopping.

In recent years (since 2015), the proportion of bitcoin activity associated with illegal trade has declined. There are two reasons for this trend. The first is an increase in mainstream and speculative interest in bitcoin (growth in the number of legal users), causing the proportion of illegal bitcoin activity to decline, despite the fact that the absolute amount of such activity has continued to increase. The second factor is the emergence of alternative cryptocurrencies that are better at concealing a user’s activity (e.g., Dash, Monero, and ZCash). Despite these factors and numerous darknet marketplace seizures by law enforcement agencies, the amount of illegal activity involving bitcoin remains close to its all-time high.

In shedding light on the dark side of cryptocurrencies, we hope this research will reduce some of the regulatory uncertainty about the negative consequences of cryptocurrencies. Hopefully, more informed policy decisions that assess the costs and benefits will contribute to these technologies reaching their potential. Our paper also helps understand the intrinsic value of bitcoin, highlighting that a significant component of its value as a payment system comes from its use in illegal trade. This has ethical implications for bitcoin as an investment. Third, the techniques developed in this paper can be used in cryptocurrency surveillance in a number of ways, including monitoring trends in illegal activity, its response to regulatory interventions, how its characteristics change through time, and identifying key bitcoin users, such as “hubs” in the illegal trade network.

FleishmanHillard is pleased to launch our 2018 FinTech trends report – FinTech in 2018: The Fads, the Fears and the Future – featuring insight from some of the world’s most influential people in the banking, finance and FinTech community. Thirty experts from brands including Ant Financial, Citi, Ripple, Santander, Western Union, Starling Bank and Visa share their insights on the biggest opportunities for 2018 and lift the lid on their biggest fears for the year ahead.

Although a relatively new phenomenon in Malaysia, crowdfunding has been greeted by the government and market alike as a part of disruptive financial technologies (FinTech) that add impetus to Malaysia’s move towards a 21st century digital economy. With the government’s policy commitment, financial assistance, regulatory supervision and other supportive measures, crowdfunding is expected to accelerate in the near future as a critical source of alternative financing for SMEs to create new employment, enhance social participation and help Malaysia adjust to the fast-shifting dynamics of the global economic and social landscape. In spite of its promising prospects, there are gaps in awareness of what crowdfunding is and the opportunities and risks it presents. There is a shortage of actionable information on: • the role of crowdfunding in the policy, business and financing environment for SMEs; • the level of understanding of crowdfunding among the public and small entrepreneurs; • their interest and willingness to participate in crowdfunded projects/activities; and • the effectiveness of the national ecosystem for crowdfunding. This report addresses these gaps to help realise the full potential of crowdfunding in Malaysia. It is based on a two-phase research study. The first consisted of a quantitative survey of the public and small entrepreneurs within the Klang Valley, and the second involved desk research and consultations with crowdfunding platform operators, national agencies/institutions, sophisticated investors and start-up entrepreneurs. The report describes a vibrant crowdfunding environment emerging in Malaysia following Bank Negara Malaysia’s policy support for alternative financing, and the Securities Commission Malaysia’s introduction of regulatory frameworks for equity crowdfunding (ECF) in 2015 and peer-to-peer crowdfunding (P2P) in 2016. Since crowdfunding continues to evolve rapidly around the world and is still at an early stage in the country, the insights offered by this report are an initial but comprehensive snapshot of the local crowdfunding environment and its future growth potential.

The government of India has set a target of 25 billion retail digital transactions for the year 2017–18 and is pushing all agencies to work towards this goal.

This is an ambitious goal when one considers that India had only 9.6 billion retail digital transactions in the year 2016–17.

Balakrishnan's paper examines the last 10 years of payment system data to establish trends and identify when India is likely to reach this target of 25 billion retail digital transactions. It also examines where India stands on the Rogers diffusion innovation curve with regard to the adoption of digital payments.

Although India’s digital payments are growing, historical data and trend line projections suggest that the government of India’s target of 25 billion retail digital transactions in 2017–18 is unlikely to be reached.

It is, however, conceivable that this might happen by 2019–20. With India still at the early adoption stage in digital payments and yet to reach a tipping point in terms of digital payments adoption, it will take a mighty effort to meet the ambitious target this (or indeed next) year.

Government, regulators and other stakeholders can, however, adopt specific strategies such as appropriate pricing, reducing taxation, allowing white-label POS operators, supporting innovation and creating a level playing field, widening access, tapping the billions of transaction opportunities, standardising message formats and strengthening consumer protection to improve the digital payment infrastructure and speed up adoption to achieve the target of 25 billion transactions before 2019–20.

While this paper focuses on India, the strategies are applicable to any developing country interested in strengthening digital payments.

The full paper can be read at https://www.henrystewartpublications.com/jps/sample6

"Ethical issues in the financial services industry affect everyone, as almost all of society are consumers of its products and services. Given the vital role that financial institutions play, moral hazards may be more acute and it is therefore unsurprising that the industry should be subject to the highest ethical standards. Ethical dimensions create an environment based on trust and make economic transactions more predictable for producers and consumers".

The 2008 global financial crisis represented a pivotal moment that separated prior phases of the development of financial technology (FinTech) and regulatory technology (RegTech) from the current paradigm. Today, FinTech has entered a phase of rapid development marked by the proliferation of startups and other new entrants, such as IT and ecommerce firms that have fragmented the financial services market. This new era presents fresh challenges for regulators and highlights why the evolution of FinTech necessitates a parallel development of RegTech. In particular, regulators must develop a robust new framework that promotes innovation and market confidence, aided by the use of regulatory "sandboxes." Certain RegTech developments today are highlighting the path toward another paradigm shift, which will be marked by a reconceptualization of the nature of financial regulation.

"Restoring the trustworthiness of global business will be a long-haul and there are no short-cuts when it comes to trying to embed ethical behaviour in business DNA. But the dialogue in global board rooms is beginning to change with the importance of corporate culture, behaviours and the causal links to incentives and rewards gradually being recognised. Our international businesses will always have responsibilities that go way beyond compliance - you cannot regulate for good behaviour. Sustainable improvements in culture and behaviour in banking and right across the business landscape can only be achieved if individual institutions, owners, investors and the people leading and managing them step up to the plate. As Dr Madden's thought provoking book makes clear, responsibility and accountability have to move to the top of every Board agenda". Dame Collete Bowe, Chairman, UK Banking Standards Board.

In the latest issue (Issue 13 – August 2017), it covers the stories of:

Financial Crime Risk : Anti-Money Laundering Practices in Banking
To understand anti-money laundering, we have to understand what money laundering is. Money Laundering is the process of converting illegal funds into seemingly legitimate assets with the purpose of concealing the ownership or original source of these funds. This makes it difficult for the authorities to trace the origins of the funds. To counter this, the banking sector has established a set of internal regulations and system known as anti-money laundering. These are legal controls taken by financial institutions to investigate suspicious transactions to help prevent money laundering activities within the banking sector.

The Rise of Text Mining in Financial Markets
The world is awash in data. Financial markets are awash in data. We are generating around 2.5 quintillion (2.5×1018) bytes of information every day, and there is an average of 4,000 brokerage reports a day comprising around 36,000 pages in 53 languages. As market participants try to maximize their competitive edge from the growing mountain of information, the nancial world increasingly feels there is a need to harness the power of big data and it has been shaping the way they acquire, analyze and utilize data. The recent development is the rapid expansion of text mining. Hence, this article will focus on the development of Text Mining technology as well as Text Mining technique.

Financial Technology (FinTech) is here – sweeping through finance and, if some are to be believed, threatening traditional edifices that have stood for centuries.

This great surge is being fronted by a host of new start-ups taking their lead from the big tech innovators. Their maverick approach is helping to push the FinTech industry into new territory across the financial services landscape, raising billions of dollars and worrying the incumbents.

So what are the main trends and driving forces shaping FinTech today? Fintech – transforming finance explores the features of this new landscape, highlighting the many ways in which this revolution is taking place.

For professional accountants, this new terrain will provide many opportunities as it permeates deeper and deeper into the fabric of society. From the promise of blockchain, to the demands of valuation in a digital era, finance more than ever needs an experienced, knowledgeable guide to make the most of the opportunities ahead.

Given most of the FinTech innovations, in particular the DLT, are developed for providing services directly to consumers, FinTech has initially been regarded as disruptive to the established financial institutions. However, a more recent development is that increasingly FinTech innovations are developed by, and in collaboration with, the well established incumbents in the financial sector. There are two very insightful reports on FinTech and DLT published by the FSDC in May 2017; which covers extensively the following areas including cybersecurity, payment and securities settlement, digital ID and KYC utility, WealthTech and InsurTech (including data analytics, automation and artificial intelligence), RegTech as well as Distributed Ledger Technology.